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Project manager Robert Lee received a £70,000 tax demand in relation to a number of 'outside IR35' contracts he completed for Nationwide Building Society between 2012 and 2015, delivered through his limited company Northern Light Solutions.
HMRC argued that the manner in which Mr Lee operated for Nationwide meant his engagements should have been classified as 'inside IR35', and deemed her therefore should have been taxed as a 'disguised employee'.
Mr Lee unsuccessfully challenged HMRC on the matter through a First-Tier Tribunal in February 2020 and subsequently launched a second appeal at the Upper Tribunal hearing in May 2021, which has also failed.
The court notes suggest that the contract was neither clearly inside or outside IR35, but that the contractor failed ‘key IR35 status tests’ - control; substition and mutuality of obligation.
Status tests
The Tribunal agreed with HMRC on various points, including the high level of control which Nationwide exercised, including the hours and the place where Mr Lee worked.
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The Upper Tribunal agreed with the First Tier Tribunal’s view that mutuality of obligation existed in the working relationship for the duration of the contracts, but recognised that there was no obligation for Nationwide to provide work beyond the length of each contract. Nevertheless, the Tribunal felt that this consistent with that of employment.
The Tribunal judge described Mr Lee as being ‘part and parcel’ of Nationwide’s organisation and that the arrangement was one of 'employment' for tax purposes.
It is not known yet if Mr Lee will escalate the case further through the Court of Appeal.
Further IR35 information
For more information about all aspects of IR35, including the controversial IR35 reforms see Shout99's News on IR35 section.
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Susie Hughes © Shout99 2021
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